Vega Music's Projected Net Income and Free Cash Flows Are

question 21

Multiple Choice

Vega Music's projected net income and free cash flows are given above in thousands of dollars.Vega expects their net income and increases in net working capital to increase by 5% per year.If Vega were able to reduce its annual increase in working capital by 10% without affecting any other part of the business adversely,what would be the effect of this reduction on Vega's value,given a cost of capital of 13%?

• A)an increase of $500,000
• B)an increase of $1,370,000
• C)an increase of $2,500,000
• D)an increase of $3,800,000
• E)an increase of $350,000

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Definitions:

Subscription-Based

A business model where customers pay a recurring price at regular intervals to access a product or service.

Electronic Communications Privacy Act

The Electronic Communications Privacy Act is legislation in the United States that protects wire, oral, and electronic communications while those communications are being made, are in transit, and when they are stored on computers.

Business Communications

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Defamatory Statements

False and harmful assertions made about another person, potentially causing damage to their reputation.